01 Jul 2021

Since my last Newsletter, the team has undertaken a huge amount of activity across consultation responses, events and collaboration with the The Investment Association (The IA).  After the summer we expect to be involved, alongside members and other trade associations, in further engagement with policymakers around the consequences of recent policy decisions for the attractiveness of UK real estate. 

The Long Term Asset Fund

After the flurry of consultation responses reported in my last Newsletter piece, (UK Funds Regime, DWP and the charge cap, MHCLG Call for Evidence on Commercial Rents and Covid-19), the team has been focussing on one: “CP21/12: A new authorised fund regime for investing in long term assets” or “the LTAF consultation” for short.  Our response was submitted on 25th June. 

Government has committed to having the Long Term Asset Fund launched before the end of the year and intense work has been going on for some time by the Productive Finance Working Group, which includes some AREF members, to meet this deadline.  As currently designed the LTAF will not be for retail distribution, which is disappointing, especially in the light of the continuing outflows which we are seeing from the daily-traded property funds.  Concerns have been expressed by the industry that the LTAF is not commercially attractive in its current form. 

The headline requests from AREF’s response are:

  • The LTAF should be open to retail as well as DC money;
  • SDLT seeding relief must be provided if necessary for property LTAFs. 
  • The liability of external valuers will need to be based on “gross negligence”, not “simple negligence”. 
  • The door should be left open for daily-traded property funds for properly qualified/advised retail investors.  This was part of AREF’s response to CP20/15 (last year’s FCA consultation on notice periods) where the option of a hybrid model was proposed.

We have also taken the opportunity to mention the role that the CVA is playing in increasing the riskiness of real estate income and changing the character of the investment, increasing the cost of capital for the sector and potentially reducing investment into precisely the kind of long-term assets to which the government desires to attract funding. 

There has again been a significant degree of collaboration with other trade bodies, notably the IA, INREV, AIMA and CREFCE. 

Thanks are due to Jacqui and the Public Policy Committee who have devoted significant time to producing a high quality response.  Thank you also to all members who participated. 

The MSCI/AREF UK Quarterly Property Fund Index

Feedback from research conducted in 2020 by Property Funds Research showed that members feel strongly that the MSCI/AREF UK Quarterly Property Fund Index needs some updating with regard to sector definitions, data collection processes and the inclusion of additional data such as ESG performance.  There has also been a request from some members who manage funds across Europe for the feasibility of a pan-European Property Funds Vision Handbook to be investigated. 

MSCI is already working on some of these issues such as sector definitions and streamlining data collection and should soon be consulting on proposed changes.  We are also discussing the more developmental topics such as the pan-European Handbook and the addition of ESG performance data and plan to come out with outline proposals after the summer. 

Similar discussions are underway between MSCI and PREA in the USA, REALPAC in Canada and the Property Council of Australia, so we hope that we can develop an enhanced set of indices that will be more useful to managers and investors alike over the coming decade. 

Protecting income

MHCLG recently announced the extension of the moratorium into March 2022.  This is part of a package designed to ensure that this is the final extension: tenants are expected to keep up-to-date with current rent once government lifts restrictions on their ability to trade; debts accumulated from when they were not allowed to trade are ring-fenced and landlords and tenants are expected to come to a fair agreement; legally binding arbitration will be in place if no agreement can be reached. 

In discussion with members there is general feeling that the prolonged moratorium and regulatory uncertainty, combined with other factors such as the CVA, is changing the risk/return profile of income-producing property from that of a secure income investment to something more private-equity-like.  This will increase the cost of capital for investment in property and some regeneration projects may become unviable. 

Together with the IA and members we will be engaging with Government to discuss how these unintended consequences of the moratorium and the CVA can be addressed. 

Digital transformation

AREF and the Investment Association have created a partnership between the IA’s FinTech accelerator, Engine, and AREF in order to explore how technology is shaping the future of real estate funds and to seek to increase its adoption.  This builds on the existing partnership between AREF and the Investment Association which saw the two join forces in March 2019.

Read more about Engine by clicking here.

The Investment Association Private Markets Committee

The IA has set up a Private Markets Committee which includes many AREF member firms and where AREF itself is represented.  It has now held two meetings. 

Given everything that is happening at the moment around liquidity and long term assets, this is an important initiative for the IA and for the UK’s investment management industry.  We will keep AREF members informed of relevant discussions. 

AREF Guidance for Investors: Questions you should be asking your Property Fund Manager

This simple guide has been put together by the AREF Investor Committee, a collection of highly experienced investors in real estate funds. The guide is intended to provide some assistance to investors who may not be fully familiar with real estate investment and dealing with property fund managers.

For more information and to read the full guidance document click here. 


The weekly member drop-ins were very popular at the height of material valuation uncertainty.  Some weeks ago we moved them to fortnightly to reflect the level of attendance.  For the same reason we are now moving them to monthly. 


Some of us are going into the office occasionally, but it is the exception rather than the rule at the moment.  However, we have just had our first team lunch since I arrived 18 months ago.  We plan a more sustained return to the office after the summer. 

Lastly, I would like to thank the vast number of speakers who have helped us over the last month with all the initiatives we've been working on recently.  There are too many names to list individually, but they include speakers for: the ESG 5 Year Roadmap; The Pub-chat Podcast Series; The FutureGen Educational Series; the Tokenisation Event and the Investor event.  Members can catch up with all the post-event recordings and podcasts by clicking the links above.

I hope you all have the chance to take a good break over the summer and that I will see many of you in person before the end of the year. 





Paul Richards

Paul Richards

Managing Director, AREF

Paul is the Managing Director of AREF.

Before joining AREF, Paul was Head of the European Real Estate Boutique within Mercer’s investment consulting business for almost 10 years, previously he was Head of Indirect Real Estate Investment and Global Managed Accounts at LaSalle Investment Management, where he was responsible for managing global portfolios of unlisted real estate funds for clients from Europe and Asia Pacific.

He has over 25 years of real estate experience in investment, corporate finance and research, and has advised investors, occupiers and venture capital companies on property portfolio strategy and on financial structuring, including PFI, senior and mezzanine debt and joint venture arrangements. His employers have included LaSalle Investment Management, Cushman & Wakefield and Henderson Investors.

Before coming into the world of real estate, Paul worked in marketing and market research. He originally studied Physiological Sciences at Lincoln College, Oxford and has a Master of Science in Real Estate from City University Business School, London, now Cass Business School.